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US setback – As Philippines Sets Aside Dispute With China

In Setback to U.S., Philippines Sets Aside Dispute With China

Southeast Asian nation moves further away from U.S., a treaty partner

By CHUN HAN WONG

Updated Oct. 20, 2016 4:58 p.m. ET

BEIJING—China scored a diplomatic victory at the expense of the U.S. as Philippine President Rodrigo Duterte set aside Manila’s South China Sea dispute with Beijing in favor of expanding economic links.

Hours after a meeting with Chinese President Xi Jinping on Thursday, Mr. Duterte announced his “separation” from the U.S., taking Manila’s shift away from its treaty ally to new rhetorical heights and in the process muzzling what had been Southeast Asia’s strongest voice against China’s escalating push to assert its maritime claims.

The two leaders brought China and the Philippines “back to the right track of dialogue” and pledged cooperation on trade, infrastructure, security and other areas, Chinese Foreign Ministry spokeswoman Hua Chunying told reporters.

Beijing meanwhile offered Manila more than $9 billion in low-interest loans, including $15 million in loans set aside for drug-rehabilitation programs, Philippine officials said, adding that the countries are also completing economic agreements valued at an estimated $13.5 billion.

Thursday’s meeting underscored a dramatic reconciliation between China and the Philippines, one that has been building since Mr. Duterte came to power in June.

A cornerstone of Mr. Duterte’s pitch to China has been his willingness to play down an international arbitration ruling that rejected Beijing’s claims in the South China Sea, even though that decision handed Manila victory in a legal challenge filed in 2013 by Mr. Duterte’s predecessor, Benigno Aquino III.

His strategy has thrown Manila’s longstanding relationship with Washington into question, undermining U.S.-led efforts to check China’s growing influence in the Asia-Pacific region.

“This is the kind of shift that was unimaginable before Duterte,” said Jin Canrong, associate dean at the School of International Studies at Renmin University in Beijing, who said a Beijing-Manila detente would significantly shift dynamics in the South China Sea.

“The U.S. excuse for entering the South China Sea is the potential for conflict between China and the Philippines,” Mr. Jin said, adding that without such conflict “the U.S. has a legitimacy problem.”

Since arriving in Beijing late Tuesday, Mr. Duterte has criticized U.S. foreign policy in a series of tirades and decried Western attacks against his antidrug campaign. He also repeated an insult against U.S. President Barack Obama, calling him the “son of a whore.”

“America, they just lost me,” Mr. Duterte said in a speech to Chinese and Filipino businessmen after his meeting with Mr. Xi. “I announce my separation from the United States,” he said, “both in military but economics also.” Addressing his hosts, he said, “I will be dependent on you for a long time.”

Mr. Duterte’s comments are “inexplicably at odds with the very close relationship” the U.S. has with the Filipino people and their government, State Department spokesman John Kirby said, adding the U.S. hasn’t seen any “tangible application” of Mr. Duterte’s anti-American rhetoric so far.

“If he goes through with this, it is obviously a big deal,” said Murray Hiebert, deputy director of the Southeast Asia program at the Center for Strategic and International Studies, a think tank. “It’s a little bit like having a guy telling his wife, ‘We’re going to get a divorce,’ but never getting the papers. We’ve got to get the papers in.”

Manila’s diplomatic shift complicates China policy for its Southeast Asian neighbors, especially those with maritime claims that rival Beijing’s, said Malcolm Cook, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore.

Claimants like Vietnam and Malaysia can no longer piggyback on the Philippines’ arbitration win as a vehicle for countering China’s territorial assertions, Mr. Cook said.

Before Mr. Duterte took office, the Philippines was among China’s most vocal critics in Southeast Asia, especially after Beijing in 2012 seized control of Scarborough Shoal, a strategic outcrop claimed by both countries. Mr. Aquino, who was president from 2010 until June, regularly urged regional unity in curtailing Beijing’s efforts to assert sovereignty over the South China Sea.

Manila’s tone shifted after Mr. Duterte, a 71-year-old populist, was elected president on an anticrime platform. Even so, he had given conflicting signals on what message he would bring to Beijing, telling reporters last weekend that he would raise the arbitration ruling with Chinese leaders.

Once in Beijing, his tone changed. On Wednesday night, he told a gathering of Filipinos that said his administration would distance itself from the U.S. while accepting Chinese aid and investment.

“Foreign policy veers now towards” China, he said. “I will not go to America anymore. We’ll just be insulted there.”

On Thursday he sealed the retreat, avoiding substantive discussions on territorial disputes in his meeting with Mr. Xi.

“Both sides agreed that the South China Sea issue is not the sum total of the bilateral relationship,” Chinese Vice Foreign Minister Liu Zhenmin told reporters after the meeting. Mr. Liu said the two leaders agreed to restart bilateral talks on their territorial disputes but didn’t discuss whether China would allow Filipino fishermen to return to Scarborough Shoal, an issue Mr. Duterte previously pledged to bring up.

Instead bilateral cooperation dominated the agenda. The countries agreed to cooperate in drug control and coast-guard activities, while China pledged to step up investments in the Philippines as part of its “Belt and Road” infrastructure initiative, China’s official Xinhua News Agency reported.

Mr. Liu, the Chinese diplomat, said China would lift restrictions on tropical-fruit imports from the Philippines, and cancel a travel advisory that discouraged Chinese tourists from visiting the Southeast Asian nation.

On Friday, Mr. Duterte is scheduled to oversee the signing of business deals and speak to executives from major Chinese state-owned enterprises including Bank of China and infrastructure companies such as China Railway Construction Corp. and State Grid Corp. of China.

—Josh Chin in Beijing, Cris Larano in Manila and Felicia Schwartz in Washington contributed to this article.